Based on feedback from networks that currently participate in ACOs, the Next Generation ACO program sets more predictable financial targets than are available under the Pioneer Model and the Medicare Shared Savings Program.

The agency wants to learn whether strong financial incentives for ACOs, combined with tools to support better patient engagement and care management, can improve health outcomes and decrease expenditures for patients in fee-for-service programs.

Next Generation ACOs will offer more predictable benchmarks and flexible payment options that support ACO investments in infrastructure to provide greater care for patients.

The new ACO initiative will allow Medicare beneficiaries the same freedom to receive care from physicians and institutions of their choice as those who now participate in fee-for-service programs. Participating organizations are expected to engage patients in their care through benefit enhancements that directly improve the patient experience while also providing incentives for seeking care from ACOs.

Next Generation ACO is meant to give Medicare beneficiaries better control over their health care and give providers better information about their patients' medical history and better relationships with patients' other providers.

CMS expects about 15 to 20 ACOs to participate in the Next Generation ACO program. Eligible organizations will participate for three years during the initial performance phase and can tack on two optional, one-year extensions. Detailed eligibility criteria(innovation.cms.gov) are available from CMS.

ACOs were launched in 2012 as part of the Patient Protection and Affordable Care Act. Participation in an ACO is voluntary for physicians, and patients who are part of an ACO do not have any change in their benefits.

CMS will accept applications for the Next Generation ACO program during two periods in 2015 and 2016. Organizations that want to apply in 2015 must submit a letter of intent(innovationgov.force.com) by May 1 and an application by June 1. The second round of applications will begin during spring 2016.

CMS will provide performance reports on the Next Generation ACOs on quality metrics, including patient experience ratings, on its website.